This policy report on Tunisia’s industrial sector is the tenth in a series of reports aimed at identifying strategic options Arab countries have in undertaking structural transformation. Using the product space methodology, this report analyzes existing capabilities of selected economies by identifying products they currently export and determining which path they should follow to produce more sophisticated and strategic products. A study of Tunisia’s product space reveals that the country should focus on facilitating the development of new complex products, particularly in the machinery/electrical clusters and a few products in the chemical and plastic rubber communities that are most attractive in terms of the tradeoff between distance and complexity. These findings call for what is termed parsimonious industrial policy or industrial policy ‘in the small’, entailing providing support and public inputs (such as infrastructure, regulation, etc.) to existing industries with the aim of improving their productivity and ability to jump to the nearby opportunities.